Trump Wants to Buy Mining Stocks
Trump Wants to Buy Mining Stocks
The story went unnoticed for nearly a week. Yesterday, it blew up in the segments of social media devoted to finance.
A week ago today, Interior Secretary Doug Burgum spoke at a conference organized by the Hamm Institute for American Energy.
He let it drop that the Trump administration is looking to invest in mining companies.
“We should be taking some of our balance sheet and making investments,” he said. As such, the U.S. government might need to make an “equity investment in each of these companies that’s taking on China in critical minerals.”
To be sure, this development is an intriguing twist on the “American birthright” story.
For months now, Paradigm macroeconomics maven Jim Rickards has been pounding the table about how the Trump administration intends to open up huge swaths of federally owned land to energy and mineral development. Potential value of the resources under that land — $150 trillion.
Jim’s thesis got early reinforcement in February when Treasury Secretary Scott Bessent said Team Trump was hatching a scheme to “monetize the asset side of the U.S. balance sheet for the American people.”
Notice that Burgum latched onto Bessent’s language about the “balance sheet.” The administration sees all those minerals and oil and gas as a federal asset. And at $150 trillion they dwarf the liability side of the balance sheet, i.e. the $36 trillion national debt.
The details are still fuzzy. But Burgum invoked the possibility of Washington forming a “sovereign wealth fund” similar to those of Norway, China and the Arab sheikdoms. This too is something Jim Rickards has written about — most recently in a 5 Bullets special edition on April 18. The SWF would be funded by that oil and mineral wealth.
Apparently, the idea now is for Washington to take the proceeds from that wealth and then invest directly in the companies exploiting that wealth — thereby setting priorities for which resources get mined and drilled first.
The social media reaction to this development has been interesting. And heartening.
“Isn’t that socialism?” says one commenter.
“This is the same China and Russia do,” says another.
“This is gonna be more corruption,” says a third. “State buys a distressed company and bails out the owner with profits. Then they will hand the company back to the private sector on a sweetheart deal.”
Hear, hear. Your editor is an ardent free marketeer and agrees wholeheartedly.
But it’s at this moment we have to remind you that you can’t let your politics affect your investing decisions.
Like it or not, politicians and government officials make decisions every day that alter the flows of billions of dollars.
Smart investing means positioning yourself as best you can to tap into those money flows — regardless of what you think the government’s role in the economy should or shouldn’t be.
Which, in a way, was the subtext to the American Wealth Summit that Jim Rickards convened yesterday afternoon. Along with everything else that’s tied in to the “American birthright” theme, Jim says the Trump administration is set to make an unprecedented move this Friday.
He believes it will be a rare chance for you to accelerate your gains from America’s $150 trillion mineral endowment — which is why he’s issuing three new official recommendations, each with 1,000% profit potential.
If you attended the summit yesterday — or if you’re already a member of Jim’s premium advisory Rickards’ Insider Intel — you already know what we’re talking about. And hopefully investing accordingly.
If you’re not, be advised that once we get past Friday, it might be too late to act. So follow this link and give Jim’s presentation a look while there’s still time.
Useless Trivia (and a Helpful Rule of Thumb)
The good news is that going into today’s market action, the S&P 500 registered its biggest six-day gain since March 2022. So says the mainstream MarketWatch site.
The bad news — which MarketWatch didn’t convey — is that the previous big gain in 2022 occurred amid a grinding bear market that dragged down the index by 25% in 10 months.
Here’s some more useless market trivia, noted by several mainstream outlets. Trump’s first 100 days back in office marked “the worst start for stocks since former President Richard Nixon’s second term in 1973.”
Seriously, what are you supposed to do with a factoid like that?
Now for a statistic that actually matters — because it suggests the S&P 500 is tantalizingly close to staging a sustainable recovery.
Here are the relevant numbers to bear in mind: The S&P set an all-time record on Feb. 19 at 6,144. The most recent low came amid the post-”Liberation Day” sell-off on April 8 at 4,982.
A good rule of thumb comes from colleague Alan Knuckman, our eyes and ears at the Chicago options exchanges: Once an index or a stock recovers half of its previous losses, the coast is clear for that index or stock to reclaim its all-time highs.
Yesterday, the S&P came *this* close to reaching that threshold. It ended the day at 5,560 — only three points shy of that critical midpoint.
If it can overcome the 5,563 mark and stay there for two or three days, it’s a safe bet that the index will return to 6,144 and likely climb higher still.
That said, it’s going to be a while longer before we get there.
The S&P 500 opened the day down 2.25% — although at last check it’s recovered half of those losses, the index now a hair below 5,500. The Dow’s losses are narrower, the Nasdaq’s steeper.
Gold continues to oscillate above and below $3,300. As we write it’s at $3,308. However, silver has lost its grip on $33, the bid now $32.63.
Crude is registering a steep drop — down 3.8% to $58.11. That’s the lowest since April 9, the day that everything was selling off hard before Trump announced the 90-day pause on his “reciprocal” tariffs. And the drop comes despite the weekly inventory numbers from the Energy Department showing drawdowns in crude stockpiles.
Bitcoin’s hold on $95,000 couldn’t last; it’s back below $94,000.
Also Useless: GDP
The proximate event for today’s stock drop — we won’t say the “cause,” because things are rarely that black-and-white — is the GDP number from the Commerce Department.
Before the market opened for the day, the statisticians issued their first guess at GDP growth for the first quarter of 2025.
The “expert consensus” among Wall Street economists called for a piddly 0.2% annualized gain. In the event, we got a 0.3% drop — the first drop since early 2022.
(We’re sure the Trump administration will be as keen to play down this development now as the Biden administration was then.)
Much of the drop can be attributed to a big spike in imports — i.e., businesses loading up on inventory from overseas in anticipation of tariffs.
It’s at this point we pause to remind you that GDP is a statistical abstraction that has zero bearing on your life or your standard of living.
“You can’t eat GDP. You can’t wear it. You can’t spend it,” said our old colleague Chris Mayer, who runs a hedge fund these days. “It’s just a number economists can play with.”
Years ago, Bill Bonner — the founder of Paradigm Press’ parent company — pointed out that if you mow your lawn and your neighbor mows his lawn, that has no effect on GDP. But if you pay your neighbor $30 to mow your lawn, and he pays you $30 to mow his, GDP miraculously grows by $60!
Comical, right? But the real-world effects are much more insidious — as PayPal founder Peter Thiel pointed out during a 2022 seminar at Stanford.
Compare American life in the 1950s, he said, with American life now. If “you shift an economy from a single-income household with a homemaker to one with two breadwinners and a third person who’s a child-carer,” he said, “statistically you have three jobs instead of one and therefore you have more GDP, and you will exaggerate the amount of progress that’s happened.”
In other words, it took only one income back in the day to support a middle-class standard of living. Now it takes both parents, scratching and struggling. But if you’re an egghead economist, it’s all good because “the economy” as measured by GDP is bigger.
Meanwhile, the Commerce Department is also out with the Federal Reserve’s preferred gauge of inflation.
“Core PCE” came in flat month-over-month. The year-over-year increase was 2.6% — the lowest in nine months, but still well above the Fed’s 2% inflation target.
The Fed’s next policy-setting meeting is still a month away. Plenty more data is set to come in before we can make a call about whether Jerome Powell and co. will resume last year’s rate-cutting cycle.
Update: COVID Redux
It’s come to this: The Trump administration is trying to assure Americans the tariffs won’t lead to empty store shelves.
As we chronicled on Monday, ship traffic from China to the U.S. West Coast is slowing dramatically. The domino effects are easy to tease out — layoffs in the transportation sector, layoffs in retail, empty shelves.
You know the issue is entering public consciousness when infographics from high-end money managers start showing up on everyday folks’ social media feeds…
"I wouldn't think that we would have supply chain shocks," Treasury Secretary Scott Bessent said yesterday. "I think retailers have managed their inventory in front of this." [See the GDP numbers above.]
“This is true of the largest retailers, but not for the smallest,” counters Craig Fuller, CEO of the logistics firm FreightWaves.
“Most small retailers did not stock up on inventory before the tariffs,” Fuller tweets. “This is an extinction event for many small American retailers and e-commerce businesses.”
Swell. As if COVID lockdowns weren’t bad enough for small business.
In many cases, Fuller says these vendors “have paused all shipments from China and are not ordering new products.
“If there isn't a resolution to Chinese tariffs by June, most of these companies will have limited inventory for the holidays. Without inventory, they have no reason to advertise. This will impact media advertising this fall.”
Or maybe it is already. Shares of Snap Inc. — the parent firm of the social-media platform Snapchat — are down nearly 15% today because the company withheld its outlook for the rest of the year. There’s just too much uncertainty, execs said, about whether advertisers will cut their spending.
As it happens, Facebook/Instagram parent Meta reports its numbers after the closing bell today. Could be interesting…
Mailbag: Power Outages and AM Radio
“Good reads and points to be aware of,” a reader writes after yesterday’s edition with an update on the power outage in Spain — complete with personal preparedness guidance.
Specifically pertaining to AM radio, he says, “Last summer I was made aware that the Federal Communications Commission was considering eliminating AM radio. Yet AM radio is listened to by many and, as noted in your article, virtual backup.”
Dave responds: Whoa, there. We’ve actually covered this matter before. To be precise, the issue a couple of years ago was whether automakers would remove AM radio from their new models.
The problem is the interference — static, buzzing and so on — generated by various electronic components in modern cars. It’s especially a problem with electric vehicles.
The automakers are all over the map as far as their approaches. Ford is the one closest to doing away with AM altogether. Toyota, Honda and Stellantis (Jeep, Ram) are among the automakers who’ve committed to keeping AM (and presumably doing the electronic shielding necessary to prevent interference).
Legislation requiring the automakers to provide AM went nowhere in the previous Congress, but it’s been reintroduced in the current session.
“Not only do you need an AM radio, but FM could prove necessary too in the event of a national grid failure,” adds our final correspondent.
“And don't forget to protect the radios from EMP by storing them wrapped in an EMP blanket.”
Dave: Yes, FM will help for information closer to home.
If you want to know which nearby radio stations are most likely to still be up and running with backup power and emergency announcements, you might try a web search for stations that are designated “LP-1” and “LP-2.” Perhaps your state broadcasters association has a list: I was able to readily locate one for Texas and another for Michigan.
Both of the AM models I mentioned yesterday have excellent FM reception as well.
EMP? I’m not nearly as concerned about that as I am about a big solar flare — bigger than the one that disrupted farmers and others a year ago. But a Faraday bag (or a home safe) does the trick in both instances.
Best regards,
Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets
P.S. A belated thank you to those readers who wrote in to wish me a speedy recovery from the stomach flu that sidelined me part of last week. I’m pleased to report my aging immune system did everything it’s supposed to and I’m at full strength!
